International tax
An oleh buying an apartment in Israel: purchase tax, rent and sale
The buyer’s status at the date of purchase decides the purchase tax bracket, and on a mid-market apartment the gap between a foreign resident and an Israeli resident buying a single home is roughly two hundred thousand shekels. The 2026 temporary exemption covers income from personal exertion produced in Israel and does not apply to the purchase, letting or sale of the apartment.
Figures are those for 2026.
Purchase tax by status
Purchase tax falls on the buyer under section 9 of the Real Estate Taxation (Appreciation and Purchase) Law, 5723-1963, with the brackets set in the Purchase Tax Regulations, 5735-1974. A buyer who is not an individual Israeli resident acquiring his only dwelling, a foreign resident included, pays 8% from the first shekel and 10% on value above ILS 6,055,070. The single-dwelling brackets are reserved for an individual Israeli resident whose purchase is his only dwelling: 0% to ILS 1,978,745, 3.5% to ILS 2,347,040, 5% to ILS 6,055,070, 8% to ILS 20,183,565 and 10% above that. The amounts are frozen from 16 January 2025 to 15 January 2028. The 8% and 10% scale is itself a temporary provision expiring at the end of 2026, renewed each time so far.
On an apartment at ILS 3,000,000 a foreign resident pays ILS 240,000 and an Israeli resident buying a single home pays ILS 45,538. The difference is ILS 194,462.
Section 9(c1c)(4)(b) provides a two-year window. A buyer who was a foreign resident at the date of purchase and who, within two years of it, becomes an Israeli resident for the first time, or a veteran returning resident within the meaning of section 14(a) of the Income Tax Ordinance (ten consecutive years as a foreign resident), is treated retrospectively as an Israeli resident for purchase tax and may claim the single-dwelling brackets. An ordinary returning resident is outside it. The refund is not automatic: the buyer applies for the assessment to be amended and refunded, proves when the centre of life moved, and does so within the period for amending an assessment. For an apartment under construction the date from which the two years run may itself be in dispute. The case law has not settled the question. The relief available to an oleh under Regulation 12A is a separate question, measured from the date of first entry to Israel rather than from the contract.
The detail is in Israeli property tax for non-residents and Buying Israeli property as a non-resident.
What the 2026 exemption covers and what it does not
The Law for the Encouragement of Aliyah to Israel and Return to It (Temporary Order), 5786-2026, was published on 31 March 2026 and applies from 1 January 2026; Income Tax Circular 07/2026 sets out its application. The exemption goes to an individual who became an Israeli resident for the first time, or a veteran returning resident, between 5 November 2025 and 31 December 2026, on income from personal exertion under sections 2(1) and 2(2) of the Ordinance, that is employment, business and profession, produced in Israel while he was an Israeli resident. The annual ceiling is ILS 600,000 for 2026 (prorated for someone who became a resident during the year), ILS 1,000,000 for each of 2027 and 2028, ILS 350,000 for 2029 and ILS 150,000 for 2030.
Income not from personal exertion, including interest, dividends, rent and capital gains, is outside the exemption and taxed under the ordinary rules; the definition of “other income” in section 62A(d) names rent and consideration from the sale of real estate rights expressly. The circular’s example: a new immigrant who arrived on 1 January 2026 with ILS 750,000 of Israeli employment income and ILS 100,000 of residential rent is exempt on ILS 600,000 of salary, the remaining ILS 150,000 of salary is taxed at the progressive rates, and the rent is taxed separately under the statutory tracks. Purchase tax is not a tax on income.
Conditions, limitations and the in-year procedure: the 2026 exemption for new immigrants and Circular 07/2026.
The adjustment year and status
Section 14(b) of the Ordinance (not section 14A) allows an individual who has become an Israeli resident for the first time, or a veteran returning resident, not be regarded as an Israeli resident for one year from immigration or return. The election is made by notice within 90 days of arrival, on the form prescribed by the Director, filed with the Ministry of Aliyah and Integration. In that year no certificate of Israeli tax residence is issued, there are no credit points, and a holding in a company is treated as a foreign resident’s holding.
Purchase tax brackets follow the buyer’s status at the date of purchase, so someone considering a purchase during the adjustment year establishes that status first. How the section 14(b) election sits alongside the two-year route in section 9(c1c)(4)(b) is not settled in the material reviewed and should be checked before signature.
For the 2026 exemption, section 2(e) of the temporary order disapplies section 14(b)(1) when testing the date on which the individual became an Israeli resident: the election neither moves that date into the qualifying window nor removes someone who moved within it. More in The adjustment year: section 14(b).
Rental income
A landlord letting a residential apartment chooses between three tracks, afresh each year. The exemption under the Income Tax Law (Exemption from Tax on Income from Rental of Residential Apartment), 5750-1990: full to ILS 5,654 per month in 2026, tapering to nil at ILS 11,308, tested month by month against total residential rents, with the tenant required to be an individual or a company approved to house its employees. The 10% track under section 122 of the Ordinance: 10% of gross rent from the first shekel, no expenses and no depreciation, reported and paid within 30 days of the end of the tax year. Marginal rates: the ordinary scale with expenses deductible, including interest on a loan that financed the purchase and depreciation of 2% a year; income not from personal exertion starts at 31%, and from the year the landlord reaches 60 the entry rate is 10%. Under the exemption and the 10% track, on a later sale without a full appreciation tax exemption, depreciation of 2% for each year let is added to the gain whether or not it was claimed.
While the owner is a foreign resident, the tenant may have to withhold. The Income Tax Regulations (Withholding from Payment of Rent), 5758-1998, set withholding at 35% of each payment. A business tenant, who can claim the rent as an expense, must withhold; a private tenant of an apartment he lives in is outside the Order, as Circular 5/98 states, though whether section 170 of the Ordinance reaches such a payment to a foreign resident is an open question. The assessing officer may reduce the rate under regulation 4, and the transfer of the rent abroad is arranged in advance with the assessing officer on form 2513, since a bank will ordinarily not execute a transfer to a foreign resident without a certificate or an appropriate declaration. See Rent paid to a foreign resident: withholding.
The sale
Appreciation tax is charged on the real gain at 25% for an individual. A qualifying residential apartment acquired before 1 January 2014 receives the linear computation: the part of the gain attributed to the period up to 31 December 2013 is exempt and the part from 1 January 2014 onwards is taxed at 25%. The full exemption on a qualifying residential apartment requires that the seller own no other dwelling, with a ceiling of ILS 5,008,000 for 2025 to 2027. For a seller who is a foreign resident at the date of sale, section 49B(2) adds that he must own no dwelling in his country of residence, and section 49A(a) presumes that he does until he produces a certificate from that country’s tax authorities.
Section 15 requires the buyer to withhold from the price an advance against the seller’s appreciation tax: 7.5% of the consideration where the seller acquired the right on or after 7 November 2001, and 15% where earlier; it is credited against the assessment. Section 73 requires both parties to file a declaration with the Real Estate Taxation Director within 30 days of signature.
| Stage | What decides it | Where it is set out |
|---|---|---|
| Purchase | The buyer’s status at the date of purchase; the two-year window in section 9(c1c)(4)(b) | Property tax for non-residents |
| 2026 exemption | The date the centre of life moved; the type of income | The 2026 exemption |
| Adjustment year | Notice within 90 days; no residence certificate that year | The adjustment year |
| Letting | Track chosen each year; withholding while the landlord is a foreign resident | Withholding on rent |
| Sale | 25% on the real gain; the section 49A(a) presumption; the section 15 advance | Property tax for non-residents |
Sources: sections 9, 9(c1c)(4)(b), 15, 49A, 49B and 73 of the Real Estate Taxation (Appreciation and Purchase) Law, 5723-1963; Real Estate Taxation (Appreciation and Purchase) (Purchase Tax) Regulations, 5735-1974, including Regulation 12A; sections 2(1), 2(2), 14(a), 14(b), 62A(d), 122, 164 and 170 of the Income Tax Ordinance [New Version], 5721-1961; Law for the Encouragement of Aliyah to Israel and Return to It (Temporary Order), 5786-2026, including section 2(e); Income Tax Circular 07/2026; Income Tax Circular 1/2011; Income Tax Law (Exemption from Tax on Income from Rental of Residential Apartment), 5750-1990; Income Tax Regulations (Withholding from Payment of Rent), 5758-1998; Income Tax Circular 5/98; form 2513.
Questions and answers
How much purchase tax does a foreign resident pay on an Israeli apartment?
A foreign resident pays 8% from the first shekel and 10% on value above ILS 6,055,070. On an apartment at ILS 3,000,000 that is ILS 240,000, against ILS 45,538 for an Israeli resident buying a single home. The difference is ILS 194,462. Figures are those for 2026.
I bought before I moved to Israel. Can I get the purchase tax difference back?
Section 9(c1c)(4)(b) provides a two-year window. A foreign resident buyer who becomes an Israeli resident for the first time, or a veteran returning resident, within two years of the purchase is treated retrospectively as an Israeli resident for purchase tax. An ordinary returning resident is outside the section. The refund is not automatic: the buyer applies to have the assessment amended, proves when the centre of life moved, and does so within the period for amending an assessment.
Does the adjustment year affect purchase tax?
Purchase tax brackets follow the buyer’s status at the date of purchase, so someone considering a purchase during the adjustment year establishes that status first. How the section 14(b) election sits alongside the two-year route in section 9(c1c)(4)(b) is not settled in the material reviewed and should be checked before signature.
Does the 2026 exemption for new immigrants cover rental income?
The exemption covers income from personal exertion under sections 2(1) and 2(2) of the Ordinance: employment, business and profession. Income not from personal exertion, including interest, dividends, rent and capital gains, is taxed under the ordinary rules. Section 62A(d) names rent and consideration from the sale of real estate rights expressly.
How much income is exempt each year under the 2026 temporary order?
The annual ceiling is ILS 600,000 for 2026, prorated where residence began during the year, ILS 1,000,000 for each of 2027 and 2028, ILS 350,000 for 2029 and ILS 150,000 for 2030. It applies to someone who became an Israeli resident for the first time, or a veteran returning resident, between 5 November 2025 and 31 December 2026.
How is rent from an Israeli apartment taxed?
A landlord letting a residential apartment chooses between three tracks, afresh each year. The exemption is full to ILS 5,654 per month in 2026 and tapers to nil at ILS 11,308, tested month by month against total residential rents, and the tenant must be an individual or a company approved to house its employees. The 10% track under section 122 charges 10% of gross rent from the first shekel, with no expenses and no depreciation. Marginal rates apply the ordinary scale with expenses and depreciation deductible.
Does the tenant withhold tax when the landlord is a foreign resident?
While the owner is a foreign resident, the tenant may have to withhold 35% of each payment. A business tenant, who can claim the rent as an expense, must withhold. A private tenant of an apartment he lives in is outside the withholding obligation, as Circular 5/98 states, though whether section 170 reaches such a payment to a foreign resident is an open question.
What tax is due when the apartment is sold?
Appreciation tax is charged on the real gain at 25% for an individual. The full exemption on a qualifying residential apartment requires that the seller own no other dwelling, with a ceiling of ILS 5,008,000 for 2025 to 2027. A foreign resident seller must also own no dwelling in his country of residence under section 49B(2), and section 49A(a) presumes that he does until he produces a certificate from that country’s tax authorities.
Further reading
Last updated: 7 September 2026
This page is a general overview only. It is not legal or tax advice and should not be relied on in making decisions. The law, the amounts and the brackets change from time to time, and specific circumstances require individual advice.